Upon receiving guidance from New York's highest state court, the U.S. Court of Appeals for the Second Circuit upheld summary judgment in a case that has become one of the most closely watched international trademark cases in recent years (See IP Update, Vol. 11, No. 1, published in January 2008.) ITC Limited v. Punchgini, Inc., Case No. 05-0933 (2nd Cir., Feb. 26, 2008) (Straub, J. and Raggi, J.).
The case began in 2003 when the plaintiff, ITC Ltd. (based in India), sued Punchgini, Inc. over the usage of the name "Bukhara" in the defendant's New York restaurant chain, Bukhara Grill. In an earlier decision, the Second Circuit affirmed the grant of summary judgment on ITC's trademark infringement claims under the Lanham Act and New York common law, concluding that ITC had abandoned its Bukhara mark for restaurant services in the United States.
The Second Circuit further affirmed summary judgment on ITC's federal unfair competition claim because it depended on the "famous marks" doctrine, which Congress has not specifically incorporated into federal trademark law. At the same time, however, the Second Circuit recognized the possibility that the famous marks doctrine might support a New York common law claim for unfair competition. Accordingly, the Second Circuit certified two questions to the New York Court of Appeals: "Does New York common law permit the owner of a federal mark or trade dress to assert property rights therein by virtue of the owner's prior use of the mark or dress in a foreign country?"; and "If so, how famous must a foreign mark be to permit a foreign mark owner to bring a claim for unfair competition?"
Although the New York Court of Appeals responded to the first question in the affirmative, it specifically stated that it did not recognize the famous marks doctrine as an independent theory of liability under state law. Rather, the court explained that its affirmative response was intended only to reaffirm established state law prohibiting unfair competition. The court further observed that whether the business is domestic or foreign, to pursue a New York unfair competition claim, a plaintiff must prove both deliberate copying and secondary meaning, i.e., the ability of a trademark to identify the source of a product, rather than the product itself.
Armed with answers from the New York Court of Appeals, the Second Circuit found that although there was sufficient evidence of deliberate copying, there was no evidence that ITC's mark had acquired any secondary meaning in New York and affirmed the district court's award of summary judgment in its entirety.
Practice Note: Although ITC failed to offer evidence that the defendant's potential customers "primarily associated" the Bukhara mark with the foreign holder, the Second Circuit suggested that such evidence of secondary meaning in the relevant market could have been established through consumer study evidence linking the Bukhara mark to ITC, research reports demonstrating strong brand name recognition for the Bukhara mark in the United States or a showing of overlap between customers of defendant's Bukhara Grill in New York and the ITC's Bukhara in New Delhi.
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